Experts sound alarm over NNPC’s N11.18trn crude-backed loans, demand full Gazelle 2 disclosure

Financial experts have questioned the transparency of the Nigerian National Petroleum Company Limited’s (NNPC) N11.18 trillion crude-backed financing facilities, warning that the deals could mortgage future oil revenues, weaken Federation earnings and prolong Nigeria’s debt exposure.

The concerns centre on three pre-export finance (PXF) facilities — Project Gazelle, Project Leopard and Project Leopard II — which, according to NNPC’s 2025 audited financial statements, collectively commit more than 186,000 barrels of crude oil per day to debt repayment.

The volume represents about 11 percent of the country’s current oil production, with an estimated 340 million barrels earmarked through 2030.

Managing Director and Chief Executive Officer of CFG Advisory, Tilewa Adebajo, described the arrangements as a costly commitment of the country’s future oil earnings in a detailed critique titled “The PXF Prison.”

“In the last 24 months, Nigeria did not borrow money. Nigeria borrowed its future oil,” he wrote.

Adebajo identified five major concerns: the use of Federation royalty and tax crude rather than NNPC’s own production as collateral; below-market pricing and the routing of proceeds through offshore vehicles; the commitment of significant crude volumes before domestic requirements are met; delayed and incomplete disclosure; and refinancing arrangements that extend rather than resolve the country’s exposure.

Analysts at Proshare also warned that crude-backed financing brings immediate liquidity at the cost of longer-term claims on revenues that would otherwise accrue to the Federation.

“Crude-backed financing brings revenue forward and creates longer-term claims on receipts otherwise available to the Federation,” Proshare said.

The analysts called for a comprehensive reconciliation of each facility’s original principal, drawdowns, outstanding obligations, financing costs, crude deliveries and beneficiaries.

They also stressed the need to disclose the executed terms of the proposed Gazelle 2 refinancing, the statutory approvals supporting it and its expected impact on distributable Federation revenue.

“Without these details, the gain in immediate liquidity cannot be reliably weighed against the cost of committing future crude receipts,” Proshare said.

NNPC reported total commitments of N12.083 trillion across crude forward sales, gas and upstream funding as of December 31, 2025, of which N2.886 trillion had been settled.

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Project Gazelle, a five-year N5.1 trillion facility secured against 90,000 barrels per day from production-sharing contract assets, had N4.9 trillion drawn and N2.09 trillion repaid by the end of 2025, leaving N2.81 trillion outstanding.

Project Leopard, valued at N3.05 trillion and backed by 35,000 barrels per day, was fully drawn by February 2025. With N420 billion repaid, its outstanding balance stood at N2.47 trillion.

Project Leopard II, worth N3.03 trillion and secured against 61,250 barrels per day, was fully drawn by December 31, 2025, with no principal repayment recorded. Repayments were scheduled to begin in June 2026 following a six-month moratorium.

The proposed refinancing of Gazelle has intensified scrutiny of the structure and cost of the crude-backed loans.

At its 159th meeting, the National Economic Council (NEC) approved the refinancing of the original $3.3 billion Gazelle facility through a new $4.5 billion Project Gazelle 2.

The new arrangement is intended to retire about $1.5 billion in outstanding obligations and provide an additional $3 billion in liquidity for external reserves, while reducing the daily crude commitment from 90,000 to approximately 78,750 barrels.

However, the tenor, pricing and identities of the lenders have not been disclosed.

Finance Minister Taiwo Oyedele described the new terms as “more favourable” than those of the original facility. Nevertheless, analysts say the reduction in daily crude volumes, alongside the larger refinancing amount, raises questions about the repayment period and the overall cost of the arrangement.

The original Gazelle structure, identified in an August 2023 Afreximbank proposal, converts future royalty and tax entitlements into an upfront advance.

Under production-sharing contracts, the relevant crude volumes are lifted by NNPC on behalf of the Federation and should ordinarily contribute to revenues distributed through the Federation Account Allocation Committee (FAAC).

Once pledged to lenders, however, the economic value of those receipts is diverted towards debt servicing, potentially reducing funds available for distribution to the federal, state and local governments.

Interest on the original Gazelle facility has been reported at 11.85 per cent, linked to the Secured Overnight Financing Rate (SOFR) plus a margin.

CFG Advisory has proposed using a sovereign Eurobond specifically to refinance and extinguish the Gazelle obligation, thereby releasing the pledged crude and potentially lowering borrowing costs.

Nigeria’s Eurobond curve on October 8, 2026, showed yields ranging from 7.54 per cent to 8.02 per cent for intermediate maturities, below Gazelle’s reported financing cost.

However, a meaningful comparison would require consideration of the Eurobond’s maturity, issuance costs, currency exposure and other borrowing terms, alongside the complete cost of the existing facility.

Questions have also emerged over the pace of disbursement under NNPC’s upstream funding commitments.

Of the N1.54 trillion committed to OML 42, only N44.98 billion had been provided by the end of 2025. Similarly, just N13.93 billion had been drawn from the N957.65 billion committed to OML 65.

The limited drawdowns contrast with the full utilisation of the crude-backed facilities over the same period.

Proshare said it would continue to monitor the publication of Gazelle 2’s executed terms, debt-service reconciliations, facility balances in NNPC’s 2026 half-year accounts, the commencement of Leopard II principal repayments and monthly revenues distributed through FAAC.

The analysts said transparent disclosure was necessary to establish the true fiscal cost of the facilities and determine how much crude had been delivered, how much debt remained outstanding and what revenue the Federation had sacrificed.

Until the principal balances, interest costs, crude deliveries, outstanding barrels and statutory approvals are fully reconciled, the analysts warned, the immediate liquidity benefits cannot be adequately assessed against the long-term burden on Nigeria’s oil revenues.